Palm Harbor Acquisition Boosts Cavco Profits
Cavco Industries Inc. today (Nov. 3) announced financial results for the second quarter and first six months of its fiscal year 2012 ended Sept. 30.
Net sales for the second quarter of fiscal 2012 totaled $130 million, up 183% from $45.9 million for the second quarter of fiscal year 2011, according to a news release.
As previously reported, Fleetwood Homes Inc., a subsidiary owned 50% by Cavco and 50% by Third Avenue Value Fund (TAVFX), completed the acquisition of substantially all of the assets and assumption of certain liabilities of Palm Harbor Homes Inc. during the quarter ended June 30, 2011.
Palm Harbor had been in the business of manufacturing and marketing factory-built housing and providing related consumer financing and insurance products. The aggregate gross purchase price, exclusive of transaction costs, specified liabilities assumed and post-closing adjustments, was $83.9. The results of the Palm Harbor operations have been included in the consolidated financial statements since acquisition.
Net income for the fiscal 2012 second quarter was $3.2 million compared to $1.2 million reported in the same quarter one year ago. During the quarter, the company incurred $120,000 in acquisition-related costs for the purchase of the Palm Harbor Homes assets and expects to have additional transaction-related expenses during the remainder of fiscal year 2012.
“We are glad to report positive earnings for the second quarter of fiscal year 2012. Cavco benefited from higher order rates during the quarter, which translated into improved results compared to recent quarters and demonstrates the operating leverage we believe exists in the Cavco group of companies,” said Joseph Stegmayer, chairman, president and CEO, while commenting on the quarter.
Interest expense of $1,916,000 was recognized during the second quarter of fiscal 2012, primarily related to securitized financings and a mortgage construction lending facility of the finance subsidiaries acquired.
Net income attributable to Cavco stockholders for the fiscal 2012 second quarter was $1.6 million compared to $680,000 reported in the same quarter one year ago. Net income per share based on basic and diluted weighted average shares outstanding was 24 cents versus basic and diluted net income per share of 10 cents last year.
For the first six months of fiscal 2012, net sales increased 145% to nearly $229 million from $93.4 million for the comparable prior year period. Net income for the first half of fiscal 2012 was $23.8 million compared to $2 million last year. Included in net income for the six months ended Sept. 30, 2011, was a gain on bargain purchase of $22 million resulting from the acquisition of Palm Harbor, as adjusted during the fiscal 2012 second quarter and calculated in accordance with the accounting standards for business combinations.